The rupee saw some appreciation on Tuesday, on the back of a soon-expected GST overhaul and surging equity markets.
It gained 40 paise to close at 86.99 (provisional) against the US dollar, as against closing at 87.39 against the US dollar on Monday.
At the interbank foreign exchange market, the rupee opened at 87.24 against the US dollar, touched an intraday low of 87.31 and a high of 86.92, and settled at 86.99 (provisional), registering a gain of 40 paise over its previous close.
Forex traders expect the rupee to trade with a positive bias now that the global geopolitical tensions seem to be easing, especially in the wake of a meeting between US President Donald Trump and his Russian counterpart, Vladimir Putin to discuss ways to bring peace in Ukraine.
"The Indian rupee rose to the highest levels in a month on optimism over GST restructuring as announced by Prime Minister Narendra Modi at the Independence Day speech. Easing worries over additional tariffs by the US also boosted market sentiments," said Anuj Chaudhary, Research Analyst, Commodities and Currencies, Mirae Asset Sharekhan.
Also Read: Stock markets see green for 4th day on the back of GST reforms
The government has proposed a two-slab regime instead of the current four-tier structure. If approved by the GST Council, the 12 per cent and 28 per cent tax slabs will be axed.
The only tax slots remaining will be of 5 per cent and 18 per cent, plus a special 40 per cent top bracket for 5-7 demerit goods.
Traders said they expected the rupee to trade with a positive bias on upbeat domestic market sentiments while they take cues from building permits and housing starts data from the US.
"We expect the rupee to trade with a positive bias on upbeat domestic market sentiments due to GST rationalisation and fading trade tariff concerns. Falling crude oil prices and overall weakness in the greenback may also support the rupee," Chaudhary said.
However, increased demand of dollar by importers may cap sharp gains. USD-INR spot price is expected to trade in a range of 86.70 to 87.40, Chaudhary added.
Meanwhile, Brent crude, the global oil benchmark, was trading lower by 1.04 per cent at USD 65.91 per barrel in futures trade, amid cautious optimism around the Ukraine-Russia conflict.
The dollar index, which gauges the greenback's strength against a basket of six currencies, was lower by 0.13 per cent at 98.04.
On the domestic equity market front, Sensex climbed 370.64 points to settle at 81,644.39, while Nifty rallied 103.70 points to 24,980.65.
Foreign Institutional Investors bought equities worth ₹550.85 crore on Monday, according to exchange data.
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